Do we have enough to retire?

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Re: Do we have enough to retire?

Postby FabLab » Fri Mar 15, 2013 3:01 pm

One of the nuttiest threads I've read on bogleheads. Methinks, somehow, someway, other couples have managed to retire with $3M - $3.5M net worth. A $300K house for this couple amounts to chicken feed. Also, I don't consider annual expenses of $100K - $120K to be a big deal (it's what we run in retirement as well). Enjoy your lives!
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Re: Do we have enough to retire?

Postby Clearly_Irrational » Fri Mar 15, 2013 3:08 pm

FabLab wrote:Also, I don't consider annual expenses of $100K - $120K to be a big deal (it's what we run in retirement as well). Enjoy your lives!


That would depend on whether it's pre-tax or after tax. If it's after tax that rate is probably not sustainable on a portfolio that size. (At a guess that would be around a 4.7% withdrawal rate) If it's pretax we're only talking about 3.1% which should work fine.
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Re: Do we have enough to retire?

Postby Peter Foley » Fri Mar 15, 2013 3:09 pm

Rusa wrote:

We are not big spenders, like to have an occasional visit to the beach, have always lived well below means so can continue easily after retirement.


Absolutely you have enough to retire. Because you have the habit and desire to live below your means, I think you will do fine. While you did not ask the question, I think your AA is just fine as well. You have no need to take risk.
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Re: Do we have enough to retire?

Postby letsgobobby » Fri Mar 15, 2013 3:45 pm

Maybe for some of you $3.2M is a lot. It's not a lot if you spend 4% of it every year; with no reported plan for health care for the next seven years.

Sure, everything will probably be fine. But as I wrote, it isn't a gimme. There's some risk and it's not 1%.

We can only go by the reported information. She didn't say they spend $120k and would be happy to spend $70k. She didn't say whether there are heirs, adult dependents, etc. She didn't say whether they want to work part time or not. She didn't talk about her/his SS benefits in 4 or 7 or 12 years. She asked if she had enough to retire.

Based on the information provided, the answer is: yes, and most likely everything will be ok. But there's about a 5% chance it won't be.
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Re: Do we have enough to retire?

Postby Jim85 » Fri Mar 15, 2013 3:53 pm

The OP better have enough to retire or I'm working a lot longer than I thought. I can't believe any of the "live below your means" crowd could think $3.2m is not enough at 58.
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Re: Do we have enough to retire?

Postby livesoft » Fri Mar 15, 2013 3:54 pm

And they can work it, so they don't have to pay income taxes, too: viewtopic.php?t=87471
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Do we have enough to retire?

Postby livesoft » Fri Mar 15, 2013 3:56 pm

2wolves wrote:
livesoft wrote:There are many calculators that try to answer the question. Have you tried them?

One's I would use are http://www.firecalc.com , Fidelity's Retirement Income Planner, and Otar's flexible retirement planner.


Does firecalc still not account for taxes? It would be the best tool if it did, but without that, I have trouble trusting it's conclusions without making a bunch of complicated adjustments.

FIRECalc has always accounted for taxes. It has never not accounted for taxes.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Do we have enough to retire?

Postby ResNullius » Fri Mar 15, 2013 4:15 pm

HomerJ wrote:
bottlecap wrote:I think you're close, but a 4% withdrawal rate is not a sure thing. On the bright side, you will be eligible for social security within the next decade, which will help a lot.


And they're both high earners, so SS benefits are going to be close to 2000/month EACH... They'll be getting at least $40k (inflation-indexed) a year from SS someday.


I currently get $30K per year in SS, not counting my wife (and she will get close to the max when she hits the magic age). On top of this, I get Medicare, which saves me a fortune over what I was paying for individual BCBS. My wife will get a similar savings when she hits Medicare.
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Re: Do we have enough to retire?

Postby MnD » Fri Mar 15, 2013 4:17 pm

Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old. :(

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class! :shock:

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year! :x

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.
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Re: Do we have enough to retire?

Postby HomerJ » Fri Mar 15, 2013 5:38 pm

letsgobobby wrote:Based on the information provided, the answer is: yes, and most likely everything will be ok. But there's about a 5% chance it won't be.


But again, that 5% chance is not that they run out of money, but that they cut back to 3 big vactions a year instead of 5.
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Re: Do we have enough to retire?

Postby HomerJ » Fri Mar 15, 2013 5:45 pm

MnD wrote:
Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old. :(

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class! :shock:

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year! :x

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.


Best. Freaking. Post. Ever.

I'm serious. This is the best post I've ever read on these forums.
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Re: Do we have enough to retire?

Postby Confused » Fri Mar 15, 2013 5:46 pm

Wolkenspiel wrote:whether I still like my work more than other ways of spending my time, not on SWR hair splitting.


How on Earth could you ever like your work more than other ways of spending your time? Work provides one benefit - money. If I don't need money, I'm not working.
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Re: Do we have enough to retire?

Postby Grt2bOutdoors » Fri Mar 15, 2013 5:55 pm

MnD wrote:
Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old. :(

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class! :shock:

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year! :x

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.


I second that, best post of the work week!
"Luck is not a strategy" Asking Portfolio Questions
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Re: Do we have enough to retire?

Postby suming » Fri Mar 15, 2013 5:58 pm

Hi, MnD
The best post ever...
Very curious how the OP's thought about that?
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Re: Do we have enough to retire?

Postby gkaplan » Fri Mar 15, 2013 5:59 pm

HomerJ wrote:
MnD wrote:
Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old. :(

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class! :shock:

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year! :x

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.


Best. Freaking. Post. Ever.

I'm serious. This is the best post I've ever read on these forums.


I'd be hard pressed to disagree.
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Re: Do we have enough to retire?

Postby downshiftme » Fri Mar 15, 2013 6:02 pm

If you invest like Bogleheads and stick to your 120K gross withdrawal rate (including taxes, expenses and everything) you should be fine. It's a lot more than I am planning to retire with.

The only cases I know where people with this kind of asset base ran into problems were out of control spending or taking a flier on some crazy investment theory that went bad and wiped out millions. If you stay reasonably diversified, you should be golden.
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Re: Do we have enough to retire?

Postby Peter Foley » Fri Mar 15, 2013 8:54 pm

Great post MnD. I had to share it with my wife. :sharebeer
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Re: Do we have enough to retire?

Postby ebeard » Fri Mar 15, 2013 9:18 pm

Rusa wrote:Two 58 year olds with $3.5 million in assets, no debt at all, currently renting but plan to buy living space in the next two years with money from recent sale of house. Current asset allocation is 40 stocks/60 bonds and lots of cash from recent house sale. Wife is (more than) ready to retire from Biglaw at the end of the year. Hubby may want to retire from medical doctor work a year or so later. Practicing the Boglehead way with stock investments in Vanguard index funds VTI, VNQ, VEU and bonds in Vanguard BND and TIP. Will be moving back to Denver, CO after Hubby retires from current job in DC. We are not big spenders, like to have an occasional visit to the beach, have always lived well below means so can continue easily after retirement.

Any thoughts would be appreciated.


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Re: Do we have enough to retire?

Postby lwfitzge » Fri Mar 15, 2013 9:26 pm

Grt2bOutdoors wrote:
MnD wrote:
Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old. :(

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class! :shock:

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year! :x

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.


I second that, best post of the work week!




Love this post....thanks
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Re: Do we have enough to retire?

Postby K-Bogle » Fri Mar 15, 2013 9:48 pm

Peter Foley wrote:Great post MnD. I had to share it with my wife. :sharebeer


Funny, I also shared it with my wife immediately upon reading it. And shared a promise that we'd never let this happen to us.

Not to criticize the OP or her particular situation, but I sincerely hope I'd be willing to cut the cord much sooner and use my remaining youth to enjoy the lifestyle that money can't buy.
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Re: Do we have enough to retire?

Postby Investor2 » Fri Mar 15, 2013 9:55 pm

Rusa, yes, you have the Bogleheads' permission to retire from Biglaw at the end of this year - or tomorrow morning, if you prefer. Congratulations!
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Re: Do we have enough to retire?

Postby HomerJ » Fri Mar 15, 2013 10:18 pm

Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.


That's the best part...

People who say work longer because 3.5 million isn't enough just don't understand the point of saving all that money in the first place.
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Re: Do we have enough to retire?

Postby ricb » Fri Mar 15, 2013 11:45 pm

Using the 3-Fund Portfolio, is there a formula correlating TSM/TBM ratios to annual withdraw rates and number of years the portfolio is to last?

For example, will this $3.2M last for 30 years with a 2.5% annual withdraw rate using a 30/70 TSM/TBM?
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Re: Do we have enough to retire?

Postby whitefish » Sat Mar 16, 2013 12:22 am

HomerJ wrote:
MnD wrote:
Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old. :(

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class! :shock:

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year! :x

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.


Best. Freaking. Post. Ever.

I'm serious. This is the best post I've ever read on these forums.


Amen.
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Re: Do we have enough to retire?

Postby Cb » Sat Mar 16, 2013 12:56 am

In view of their work backgrounds, if the market were to crater in the early years of their retirement they might still be able to find some sort of work, like delivering pizzas or mowing lawns to address any shortfall that might appear.

Cb :|
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Re: Do we have enough to retire?

Postby Rusa » Mon Mar 18, 2013 11:40 am

Clearly_Irrational wrote:
richard wrote:Bill Bernstein, a well respected advisor, has said "Two percent is bullet-proof, 3% is probably safe, 4% is pushing it." I'm not sure anything is bullet-proof.


I would argue that spending the dividends + interest on your portfolio is bullet proof. Currently that's 2.4% for a 40/60 portfolio. Any conditions that resulted in that not being true would also likely lead to the collapse of modern society.



This is what we are hoping to be able to do, with occasional raids on the principle. Of course, if you read The Long Emergency, as I have, the collapse of modern society is inevitable and we will have a lot more to worry about than outliving our savings. :shock:
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Re: Do we have enough to retire?

Postby Rusa » Mon Mar 18, 2013 11:49 am

MnD wrote:
Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old. :(

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class! :shock:

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year! :x

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.




Best reply ever! May I call you when we get back to Denver (we are only in DC temporarily) and buy you a (cheap Coors light) beer (at happy hour at a two-for-one bar so I can have one too)? :sharebeer
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Re: Do we have enough to retire?

Postby Rusa » Mon Mar 18, 2013 11:54 am

Thanks everyone, for your kind thoughts and responses. I obviously didn't provide sufficient information but you've given us a lot to consider before I pull the plug on that Biglaw job.
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Re: Do we have enough to retire?

Postby letsgobobby » Mon Mar 18, 2013 12:03 pm

HomerJ wrote:
letsgobobby wrote:Based on the information provided, the answer is: yes, and most likely everything will be ok. But there's about a 5% chance it won't be.


But again, that 5% chance is not that they run out of money, but that they cut back to 3 big vactions a year instead of 5.

It may not be obvious cutbacks are necessary until bigger cutbacks than that are retired. That's what firecalc takes into account.

If they are as happy living on $80 as $120 then there is no issue.

Health care is totally unaddressed, as is long term care.

SS though will be meaningful, so unless they get unlucky with health care and an early bad sequence of returns they should be fine.
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Re: Do we have enough to retire?

Postby LH » Tue Mar 19, 2013 4:29 am

Clearly_Irrational wrote:
FabLab wrote:Also, I don't consider annual expenses of $100K - $120K to be a big deal (it's what we run in retirement as well). Enjoy your lives!


That would depend on whether it's pre-tax or after tax. If it's after tax that rate is probably not sustainable on a portfolio that size. (At a guess that would be around a 4.7% withdrawal rate) If it's pretax we're only talking about 3.1% which should work fine.


Well, the tax rate at retirement is very low usually, which surprised me. a lot of retirees pay very low tax.

No medicare, no SS. (no employment tax)

Taxable investment, some of it is basis, not taxed.

Roth, not taxed.

Dividends 15 percent.

80 percent of SS, not taxed (I think, kinda pulled that out of nowhere) at their level. (or maybe 80 percent taxed, 20 percent not.. hmmm)

Anyway, talking to retirees, they just dont pay much tax it seems, surprisingly enough.
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Re: Do we have enough to retire?

Postby visualguy » Wed Feb 26, 2014 1:15 am

House+$3.2M should be ok, although I also (like some others here) find it to be somewhat borderline. The problem is long-term care (potentially for two people) which can be quite expensive, and these costs are growing faster than inflation. I would shoot for something closer to house+$4M, and try hard not to be below House+$3.5M when considering OP's desired annual withdrawal.
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Re: Do we have enough to retire?

Postby dvincent1166 » Wed Feb 26, 2014 2:22 am

I am feeling really poor right now.
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Re: Do we have enough to retire?

Postby HomerJ » Wed Feb 26, 2014 2:28 am

visualguy wrote:House+$3.2M should be ok, although I also (like some others here) find it to be somewhat borderline. The problem is long-term care (potentially for two people) which can be quite expensive, and these costs are growing faster than inflation. I would shoot for something closer to house+$4M, and try hard not to be below House+$3.5M when considering OP's desired annual withdrawal.


This is a year old thread... With the 30% run-up in stocks last year, I'm quite sure the OP is very happily retired, and got to pull more than 2% out last year without worry. :)
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Re: Do we have enough to retire?

Postby visualguy » Wed Feb 26, 2014 2:40 am

HomerJ wrote:This is a year old thread... With the 30% run-up in stocks last year, I'm quite sure the OP is very happily retired, and got to pull more than 2% out last year without worry. :)


Very true - last year's run-up probably enabled them to afford retirement. Not sure how I bumped into this year-old thread...
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Re: Do we have enough to retire?

Postby bornloser » Wed Feb 26, 2014 8:26 am

Didn't realize this was a revived post. Anyway MnDs post is spot on and should receive an award for superb sarcasm. A couple of things jump out at me with the OPs situation:
1. He's a physician. Physicians have a much better idea of medical costs, how to avoid all the unnecessary tests and upsells in medicine.
2. They are Bogleheads and specifically state they are of the LBYM mindset, so come on people, you think they can't live within their means or adjust downward if necessary.
3. They are 58 and busted ass many years to get to where they are. So exactly when should they enjoy the retirement years? Osteoarthritis and cancer are calling.
4. They are both getting SS and it's just a few years away, so 3.5% withdrawal rate will go down when SS is tapped; lots of options for them.
5. Bogleheads are notorious for going overboard on the whole topic of "how much is needed". Sometimes it's downright funny the amounts that are suggested.
6. There is a small army of persons on the early retirement forums that retire with similar parameters and they seem to be doing just fine.
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Re: Do we have enough to retire?

Postby visualguy » Thu Feb 27, 2014 12:34 am

bornloser wrote:There is a small army of persons on the early retirement forums that retire with similar parameters and they seem to be doing just fine.


You can't really say that they do fine until you follow them for the very long period of their retirement. A lot can (and does) happen in the 40 years or more that these early retirees have to worry about.

Also, I don't think saving 25 or 30 times annual withdrawal (plus a reasonable home) is anywhere near safe-enough. You can get unlucky with a particularly nasty and long bear market, you (and/or your spouse) may live well beyond your life expectancy, you (and/or your spouse) may need expensive long-term care, etc. While encountering any specific one of these may be somewhat unlikely, getting hit by at least one is quite likely.

Long-term care is a particularly big one. I've seen it multiple times in my family and my wife's family. Multiple people with huge expenses of many hundreds of thousands of dollars in the last few years of life (Alzheimer's, stroke, etc.) This can't be ignored when figuring out how much is needed for retirement.
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Re: Do we have enough to retire?

Postby HomerJ » Thu Feb 27, 2014 1:33 am

visualguy wrote:
bornloser wrote:There is a small army of persons on the early retirement forums that retire with similar parameters and they seem to be doing just fine.


You can't really say that they do fine until you follow them for the very long period of their retirement. A lot can (and does) happen in the 40 years or more that these early retirees have to worry about.

Also, I don't think saving 25 or 30 times annual withdrawal (plus a reasonable home) is anywhere near safe-enough. You can get unlucky with a particularly nasty and long bear market, you (and/or your spouse) may live well beyond your life expectancy, you (and/or your spouse) may need expensive long-term care, etc. While encountering any specific one of these may be somewhat unlikely, getting hit by at least one is quite likely.

Long-term care is a particularly big one. I've seen it multiple times in my family and my wife's family. Multiple people with huge expenses of many hundreds of thousands of dollars in the last few years of life (Alzheimer's, stroke, etc.) This can't be ignored when figuring out how much is needed for retirement.


The 4% rule includes nasty and long bear markets... If everything works out, one could take out 5% or even 6% (20x and 16x your expenses) and do fine.

By saying 25x-30x, we're already being conservative, and planning for the worst case.
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Re: Do we have enough to retire?

Postby visualguy » Thu Feb 27, 2014 2:39 am

HomerJ wrote:The 4% rule includes nasty and long bear markets... If everything works out, one could take out 5% or even 6% (20x and 16x your expenses) and do fine.

By saying 25x-30x, we're already being conservative, and planning for the worst case.


Not if the market behaves somewhat like the Japanese market did... Even ignoring that (say that's very unlikely), the issues with exceeding life expectancy and long-term care are significant. I'm shooting for 30Xwithdrawal+home+$1M, and would actually like a cushion of an extra $500K beyond that. That's actually pretty minimalist when compared to the assets/income of people that I see retiring in my area in CA. For example, none of my colleagues whom I polled about this believe that they could safely retire on $2.5M+home, and most don't think that $3M+home would do it either.
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Re: Do we have enough to retire?

Postby kramer » Thu Feb 27, 2014 10:01 am

For someone born in mid to late 1950s, earning 30 years at max social security, earnings taking place from 1984 to 1913, all zeros in other years, gets you at least $2529/month at age 70. So that is probably $72K per year for this couple. . . quite a bit more than the $50K estimates I saw earlier in the thread.
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Re: Do we have enough to retire?

Postby visualguy » Thu Feb 27, 2014 1:37 pm

kramer wrote:For someone born in mid to late 1950s, earning 30 years at max social security, earnings taking place from 1984 to 1913, all zeros in other years, gets you at least $2529/month at age 70. So that is probably $72K per year for this couple. . . quite a bit more than the $50K estimates I saw earlier in the thread.


This assumes that SS won't be means tested. There's some chance that it will. Again, this adds to other risks that may not be high probability by themselves, but the risk of being impacted by at least one of them is not negligible.
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Re: Do we have enough to retire?

Postby HomerJ » Thu Feb 27, 2014 1:47 pm

visualguy wrote:
HomerJ wrote:The 4% rule includes nasty and long bear markets... If everything works out, one could take out 5% or even 6% (20x and 16x your expenses) and do fine.

By saying 25x-30x, we're already being conservative, and planning for the worst case.


Not if the market behaves somewhat like the Japanese market did... Even ignoring that (say that's very unlikely), the issues with exceeding life expectancy and long-term care are significant. I'm shooting for 30Xwithdrawal+home+$1M, and would actually like a cushion of an extra $500K beyond that. That's actually pretty minimalist when compared to the assets/income of people that I see retiring in my area in CA. For example, none of my colleagues whom I polled about this believe that they could safely retire on $2.5M+home, and most don't think that $3M+home would do it either.


Well, you're ignoring the risk of working so long and saving so much to be safe, that you die 3 years into retirement (or 3 years before retirement).

4% (25x expenses) is already very conservative... 30x is more so. 30x + 1.5 million is getting a little extreme (assuming 30x = 3 million or so). Plus, your "expenses" probably have a buffer in them anyway... My planned "expenses" in retirement include $15k a year for travel. I could certainly cut that back if I had to... So my 25x expenses may really be 35x "necessities"

Also, a very good plan B is an SPIA... You'll be able to see if your retirement plan is in trouble 15 years in, and if you retire at 60-65, you'll be 75-80, and SPIAs pay VERY well at those ages...

An 80 year-old can get like 11% from a SPIA.. so 15 years in, you've lost 50% of your money, and you're worried about running out, a 8% SPIA on half your money will get your the same 4% SWR you were using when you retired.
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Re: Do we have enough to retire?

Postby Watty » Thu Feb 27, 2014 1:51 pm

Rusa wrote:We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life :)


Some people end up spending more when they are relatively young and active after they retire but your expenses may be a lot different later in your retirment.

I have seen relatives naturally slow down later on and by the time they are in their mid-70's their spending dropped a lot since they didn't want to do things like traveling or even much shopping or eating out.

Since they were living in a paid off house while their health remained relatively good there were many months that they didn't even spend their entire social security check even though they had ample funds to spend more. When their health started declining they only have a limited number of years with higher healthcare costs.

If you have to move into assisted living someday then your other expenses would drop dramatically from the $100K+ range so you should not have much trouble affording the additional costs for that since eventually the house can be sold to free up that money if you need it.

Realistically you could retire on haf of what you have with only a modest reduction in your expected lifestyle.
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Re: Do we have enough to retire?

Postby Watty » Thu Feb 27, 2014 2:03 pm

visualguy wrote:
kramer wrote:For someone born in mid to late 1950s, earning 30 years at max social security, earnings taking place from 1984 to 1913, all zeros in other years, gets you at least $2529/month at age 70. So that is probably $72K per year for this couple. . . quite a bit more than the $50K estimates I saw earlier in the thread.


This assumes that SS won't be means tested. There's some chance that it will. Again, this adds to other risks that may not be high probability by themselves, but the risk of being impacted by at least one of them is not negligible.



Social security is in effect already means tested since for modereately high income people 85% of it is taxed and for people with an indexed income over about $60K the additional income counts less than half( 15% vs 32%) towards the calculation that figures out your benifit amount.

http://www.ssa.gov/OACT/cola/piaformula.html

Someone that has an average of $120,000 in adjusted income during their working years will only get about a 50% larger social security check than someone that had $60,000 in income, but they could have to pay taxes on 85% of that but the lower income person might not have to pay any taxes on their social security check.

http://www.socialsecurity.gov/cgi-bin/benefit6.cgi

http://www.bogleheads.org/wiki/Taxation ... y_benefits
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Re: Do we have enough to retire?

Postby DFAMAN » Thu Feb 27, 2014 4:55 pm

I like it when EmergDoc chimes in on topics like this, as I think he expresses better than most anyone I've seen a sensible way to think about risk/having enough in retirment. I would love it if he devoted some serious space in his next book to this topic. Here's his response on a recent thread re: risk of failure in SWR estimates:

"Some people are more tolerant of risk and uncertainty than others. You look at a 10-20% failure rate and think...no way, I'd rather work 5 more years and spend 30% less. I look at it and say, heck, I have an 80-90% chance that this is going to work out just fine, and if it looks like it isn't, I can fix it by spending less. Life is risky. Life is uncertain. There are no guarantees. You're far more likely to die within a few years of your life expectancy than to live to 100. Remember if you retire at 65 and your life expectancy is 84 or so, then you've got a 50% chance of dying BEFORE your life expectancy. What's the SWR for a 10 year retirement? Pretty darn high. Two "bad" things have to happen for you to run out of money. First, you have to live a long time. Second, your portfolio has to perform poorly. If the chance of that happening are 10% each, then the real risk you're running is 10%*10%, or 1%. 99/100 times it's going to be fine. That's a risk I'm willing to run no problema. Does anyone actually know someone who retired, never took out more than 4 or 5% of the original portfolio each year (adjusted for inflation), and actually ran out of money before they ran out of life? Anyone? Bueller? I think Alpo Risk is a whole lot lower than many compulsive savers imagine it is. Especially with Social Security, a caring family, and maybe even a pension or a SPIA. It's just not that big of a deal. People need to know what a SWR is and that it isn't 8 or 10% and need to watch their portfolio carefully those first 5 or 10 years in retirement. But they don't need to go crazy trying to figure out if the SWR is 3.7% or 4.1%."
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Re: Do we have enough to retire?

Postby technovelist » Thu Feb 27, 2014 5:11 pm

LH wrote:You unequivocally have enough to retire if you want.

Now, are you protected from plaque, meteors, etc?

No.


As long as they see their dentist four times a year and use a Sonicare inbetween, that should be a manageable risk.
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Re: Do we have enough to retire?

Postby technovelist » Thu Feb 27, 2014 5:16 pm

kramer wrote:For someone born in mid to late 1950s, earning 30 years at max social security, earnings taking place from 1984 to 1913, all zeros in other years, gets you at least $2529/month at age 70. So that is probably $72K per year for this couple. . . quite a bit more than the $50K estimates I saw earlier in the thread.


Of course if they have a time machine then they can check in advance whether they will be okay!
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Re: Do we have enough to retire?

Postby WolfpackFan » Thu Feb 27, 2014 5:19 pm

Colorado cost of living will be WAAAY cheaper than DC. If I were in your shoes I'd call my boss right now to let em know I ain't coming in tomorrow!

Enjoy.
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Re: Do we have enough to retire?

Postby J295 » Thu Feb 27, 2014 7:30 pm

When I observe myself being what I consider "too conservative" I recall a statement from an early retiree .... "If you want a guarantee buy a Sears battery."

Ready, aim, aim again if necessary, fire ....
Not ready, aim, aim, aim, aim, aim .......
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Re: Do we have enough to retire?

Postby visualguy » Thu Feb 27, 2014 10:16 pm

Watty wrote:If you have to move into assisted living someday then your other expenses would drop dramatically from the $100K+ range so you should not have much trouble affording the additional costs for that since eventually the house can be sold to free up that money if you need it.


Maybe if you're single... The whole issue of assisted living, nursing home, and long-term care in general is serious. The 30X withdrawal money doesn't really cover you for that. Ideally, there would be decent insurance for it, but there doesn't seem to be - you need to self-insure basically. One thing I worry about is how to avoid damaging the nest egg too much for the surviving spouse when one person starts consuming big bucks toward his/her end of life. Not to mention that the surviving spouse may need long-term care later as well.
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Re: Do we have enough to retire?

Postby visualguy » Thu Feb 27, 2014 10:37 pm

DFAMAN wrote: I think Alpo Risk is a whole lot lower than many compulsive savers imagine it is. Especially with Social Security, a caring family, and maybe even a pension or a SPIA. It's just not that big of a deal.


This is throwing in a lot of assumptions that don't apply to many people. A caring family may not be there, or maybe the retiree doesn't want to fall as a burden. A pension is rarely there these days outside the public sector and academia. Even social security may be decimated by means testing as it is in quite a few other countries. An SPIA is a useful option, but requires a significant lump sum that's gone once you buy the annuity.

Whenever I crunch the numbers with different options, I always end up with somewhere in the house+$3.5M-$4M area for a 30-35 year retirement for a couple with long-term care money and SPIA money.

I'm wondering how much it would be for a 40 or 45 year retirement in case we decide to retire early...
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